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jstratt

jstratt
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  • Bank Of America: Go Home Mr. Market, You're Drunk [View article]
    Enjoyed the article!

    As a BAC investor I think BAC should double in 5 years. That said I wouldnt buy more ahead of earnings.

    When I look at the business I dont see Mortgage activity matching last year and the Merrill Lynch unit doesnt have a quarter of double digit equity growth.

    As far as legal issues from an investor perspective that is in the rear view mirror.
    Apr 11 08:53 AM | 3 Likes Like |Link to Comment
  • JPMorgan: When To Nibble, When To Bite [View article]
    The problem I have is if you are so conservative that you go to cash and wait until JPM goes to $46 you really arent an investor.

    JPM is trading today at less than 10 x projected 2014 earnings which is reasonable. I am waiting for earnings to come as it seems like a weak quarter before adding to holdings.
    Apr 10 12:05 PM | 1 Like Like |Link to Comment
  • General Electric - Profit From Alpha Through Beta Contraction [View article]
    Adding a few thoughts

    - I thought the reduced beta gain to be made was after the crisis in 2009/2010 when the beta was much higher and the reasons for it were eliminated

    - NBC effect is minimal to GE

    - GE earnings estimates this quarter are for $.32 vs last year qtr of $.39 (down 17.9%)

    - I do think GE is cheap with a 25 handle but it could get cheaper

    As a current GE shareholder I still think it has longer term value. When I purchased it in 2009 at $7.40 a share I expected a share price of $35 5 years out. The truth is given the poor leadership I expected Immelt to be gone by now. From crisis lows I expected GE to return above the DJI or the SP500 level not 20%-50% below that level. I sure didnt expect my HON to provide double the return of GE.
    Apr 7 10:11 AM | Likes Like |Link to Comment
  • Connecting The Dots: The Iconic Coca-Cola Is A Sell At $38 [View article]
    I appreciate the authors article and perspective. As a KO shareholder I will make a few observations.

    - KO is a global drinks provider and diet Coke is only one product. People will still drink and in fact drinks will grow

    - a shift away from Coke or Diet Coke will have a measurable impact on profits.

    - KO is trading at historical PE levels usually 10% higher than other quality large caps. One does have to question whether KO still deserves this multiple.

    - I would add that KO has underperformed the SP500 by 27% over the past year

    - KO with $9 billion in FCF has been buying back shares in quantities that maintain EPS over the past 2 years

    - KO shareholders predominantly are long term and not likely to sell absent a severe event.

    I have lightened up on KO but still find a place in my portfolio given the huge cash flow. If I were running KO I would consider selling the bottlers again and move that debt off the balance sheet and increase stock buybacks. I suspect that is coming in the next few years.
    Apr 4 11:05 AM | 2 Likes Like |Link to Comment
  • Clorox: A Quality Dividend-Paying Machine To Consider [View article]
    I picked up some CLX a few months ago as a defensive move.

    So far it is flat. My brokers buy rating is an F and the recent performance history is certainly sub par.

    However in a riskier investment climate CLX with lower beta, a solid 3%+ dividend and long term consistency probably should be rated more highly. The valuation tells me the market thinks so as well. Hopefully the 9% increase in earnings this quarter comes through.
    Apr 4 08:12 AM | Likes Like |Link to Comment
  • The Stock Market Is Rigged! The Stock Market Is Not Rigged! [View article]
    I thought I would add my take on whether the stock market is rigged!

    I have known for a long time that the stock market is rigged. Further that Congress passed the changes to allow rigging. So the High Frequency Traders make money virtually every day by looking at an order entered by an investor, and front running it. That shouldnt be legal and sure isnt ethical in any civilized world.

    However if an investor is investing rather than trading, that is buying stocks and holding for a long time, the effect is meaningless. If one is trying to be a trader, that is a different story. What happened to all of the Day Traders?

    That Congress is investigating is a sham! I think it was 2008 when it came out that GS made money trading almost every single day in a quarter that was one of the worst in history. That is until they thought someone stole their secret code and cried about it damaging national security. I think they called it a potential weapon of mass destruction in the wrong hands.

    The other side of the argument I suspect is that they provide liquidity for markets at times others would not. I am not sure I buy much of that. The FBI investigation is just to provide cover for politicians.

    In my world stealing my trade and acting in front of me is unethical and illegal.
    Apr 2 10:07 PM | 2 Likes Like |Link to Comment
  • FBI investigating yet more market manipulation [View news story]
    This is a sham political article.

    The FBI cant prosecute fraudulent activity which was specifically approved by congress.
    Apr 1 10:01 PM | Likes Like |Link to Comment
  • Citigroup: No Dividend Hike Now, But What About The Long-Term Future? [View article]
    Let me explain why Citicorp failed CCAR and why it needs to revise its business model. C has a higher level of risk to investors and to the taxpayers. I first invested in C after a crash in the 1980s which was when the Saudi Prince was recruited to invest and recapitalize C.

    In that crisis C would have failed except for government support and the stock price dropped by over 90% from $100+ to $8. In 2008-9 era I sold in late 2007 for $50+ a share and watched it drop to $0.95. Again government and taxpayer implications over and above crisis liquidity.

    When you hear about 3rd world economic issues like we hear about today, that is a clue to monitor C very closely. C wants to play world banker and unfortunately it has lost everything at least twice in my investing career.

    In March 2009 at $1 per share I decided C was below the minimum level of company that I would want to invest in. As the recession faded a little and the stock rose above $2 I invested again. A few months ago I sold.

    The government is trying to save C from itself along with taxpayers. What really needs to happen is C needs to be able to manage its risks long term without going belly up every 15 years.
    Mar 29 09:46 AM | 4 Likes Like |Link to Comment
  • General Electric Shareholders Will Do Fine Without Radical Cuts [View article]
    The article misses a few pertinent points regarding GE.

    First GE is a BBB+ rated company at last check not an A, AA or its once AAA rating. I suspect one of the reasons is that GE still has $29 billion in commercial paper funding. This means short term financing that would dry up again in a crisis funding long term investments.

    Second is to point out that 5 years after a crash GE is still thinking about what actions to take. So yes investors are seeking alternatives.

    Finally whoever the guy fielding calls was in 2002 should have been getting 80% calls requesting information. The truth is he probably wasnt able to help investors because most analysts didnt understand GE at that time.

    GE was a huge financial company that only discussed its manufacturing and non financial operations. The typical analyst might write a 3 page article and not even mention that GE had financial operations. Turned out GE met its numbers back in those days by recognizing financial returns so that earnings were never missed. At least that is what has been reported since the crash.
    Mar 28 03:22 PM | 1 Like Like |Link to Comment
  • What Is Berkshire Hathaway Really Worth? A Comprehensive Look [View article]
    Great analysis!

    I would just add that BRK out performance in my mind has emanated from buying insurance companies with huge funds set aside for claims.

    As an example Buffett would buy insurance companies for 50MM that might have 500MM in invested assets set aside for future obligations. Huge bull stock markets combined with this leverage created great performance.

    Looking forward BRK will likely match the market return rather than beat it. That said if wanting to invest in a conglomerate, BRK is probably a better bet than GE and is much better managed.
    Mar 28 10:52 AM | Likes Like |Link to Comment
  • Detroit In Chapter 9: Orr Plays Hardball [View article]
    Just want to point out that Federal Bankruptcy law will prevail in the end. This process is going to be long as law is being made which will spread across the country at a rate based on how Detroit works out.

    Focus on Pension rights vs the ability to obtain financing for cities in the future. Detroit was chosen to lead the parade as few impartial observers could debate the overwhelming need for change.

    Make no mistake Detroit will set a precedent for decades to come and many US citizens will be impacted by whatever results from it.
    Mar 28 10:36 AM | Likes Like |Link to Comment
  • What Seeking Alpha Is Doing To Prevent Paid Stock Promotion [View article]
    I am shocked to think someone would try to manipulate stock prices on SA!

    chuckles...
    Mar 28 10:05 AM | Likes Like |Link to Comment
  • Why Bank Of America's Future Is Brighter Than It Was On Wednesday [View article]
    I remain overweighted in BAC and like the long term prospects. Given that I would like to offer some near term earnings observations.

    Mortgages are a prime earnings component and the volume is down significantly.

    The Merrill Lynch unit had huge profits driven by a rising stock market in 2013. The 1st quarter of 2014 does not offer that buoyancy.

    The purchase of warrants will only prevent dilution rather than improve earnings per share.

    One final point is that banks in general do very well in the absence of a recession. The same is true in the opposite direction should the economy falter.

    For this investor that has meant trimming banking shares in general while holding BAC share levels.
    Mar 28 10:02 AM | Likes Like |Link to Comment
  • Why Johnson & Johnson Moved From 'Buy' To 'Hold' [View article]
    Good article!

    JNJ is a long term model of stability and investors feel they can get a low level of growth and dividend return, with a company that would resist bear market fluctuations.

    In a time of high stock valuations investors do not want to sit in cash but do want protection from a market drop. Historically JNJ in a 20% market drop might fall 10% which is somewhat indicated by a 0.58% beta.

    Another indication of JNJ stability was when the prior CEO who was one of the worst leaders in corporate history led product failures in every product category, the stock only dropped a seeming small amount. When he was replaced purchasing JNJ was an easy choice to make.

    One last point is that JNJ given its advantages is fairly valued at 18 PE x 5.52 2013 earnings = $99.36. Then expect each quarter to incrementally improve on those earnings.
    Mar 28 09:45 AM | 1 Like Like |Link to Comment
  • Oracle's Growth Will Return The Stock To $45 Per Share [View article]
    Good article!

    I do disagree with the statement "as businesses strive for growth, the growth process will always place more demand on IT services."

    While generally true I suspect an endpoint comes. Secondly the growth process often leaves behind existing vendors.
    Mar 22 09:16 AM | Likes Like |Link to Comment
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